Target Corp. on Wednesday reported a second-quarter sales drop, dragged down by a negative reaction by some customers due to its Pride merchandise and shoppers’ inflation worries.
The Minneapolis retailer expects high interest rates, which makes credit cards more expensive to use, and higher prices on food to continue to put a strain on customers, and on Wednesday, the chain cut its profit outlook for the year. It also expects sales will decline for the remainder of the year.
Target’s comparable sales slipped 5.4 percent, according to its earnings report, while the $24.8 billion in total revenue was some 4.9 percent lower than last year.
In lowering its forecast, Target also cited the end of the student loan moratorium, which had provided one-time college students a little more financial breathing room. Profit came in above expectations, however, as Target brought inventories closer in line with cautionary spending on discretionary items by customers.
Several months ago, Target was criticized on social media for its LGBT support and for its Pride-related merchandise. Some conservative influencers noted that the company was selling LGBT-themed items for children, sparking calls for a Bud Light-style boycott before the company later confirmed in a statement that it would be pulling some of those items.
Company executives told reporters this week that they could not reveal the extent the negative reaction had on its business, but once it made the changes, those incidents subsided. Overall sales improved in July from June, they said.
Target CEO Brian Cornell said that the company has learned from the backlash and said it will be more thoughtful in merchandise offerings. However, Mr. Cornell suggested that the company would still engage in Pride-related sales.
“We’ll continue to celebrate Pride and other heritage moments, which are just one part of our commitment to support a diverse teams and guests, ” Mr. Cornell told reporters. “However, as we navigate an ever changing operating and social environment, we’re applying what we’ve learned to ensure we’re staying close to our guests and their expectations of Target.”
